I'm aware that PayPal's terms of conditions do not allow for purchase of virtual currencies such as bitcoins, however, is it possible to sell bitcoins and receive PayPal credit in return? MtGox allows you to exchange BTC > USD, but there's no way to withdraw it using Paypal or a similar service.

Is there an exchange that supports either MtGox coupons or direct bitcoin transactions to top up a PayPal account, without the use of a credit card or bank transfer? I'm interested in more obfuscated methods/workarounds as well, even with the use of multiple exchanges.

3 Answers
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LocalBitcoins is in-person exchange. The problems with PayPal tend to hit the bitcoin seller; because PayPal transfers are reversible and bitcoin transactions are irreversible you must trust the party to whom you are selling bitcoins. A malicious party can file a PayPal claim and get their fiat currency payment recalled after they receive the bitcoins. This problem is not specific to PayPal, but all credit card backed payment methods (Venmo, Dwolla, etc.)

I would not recommend using Paypal for any transaction involving Bitcoins. Many in the community have been scammed and PayPal still considers Bitcoins to be the same as ISK or WoW Gold. Instead for your transactions, I would recommend Bitpay and Dwolla.

Mind you, it's essential that the final transaction ends up in a PayPal account. I'd use Dwolla, but it doesn't support transferring to PayPal in any way as far as I can deduce. I'm not looking for alternatives, but a way to directly (or indirectly) top up a PayPal account using bitcoins. Not to mention that the information I've been able to find so far isn't exactly favourable either. (codinginmysleep.com/dwolla-begins-suspensions)
– QuillApr 24 '13 at 18:21

My issue with Paypal is that you are technically violating their eula for the commerce you wish to engage in. How about you just use your bank as a man in the middle. And transfer between Dwolla to Bank to Paypal. If you don't mind the fees, you could also setup a pay link for paypal and pay yourself from Dwolla
– Charles HoskinsonApr 24 '13 at 20:26

I had an awful time when I was paid bitcoins from a new international employer instead of USD. But after I figured it all out its pretty easy however converting it was expensive so I'm trying to find a different converter but here's how you do it.

Go to bitstamp.net, open up a free account and buy your bitcoins from your wallet. Its free.

Go to bitinstant.com, and you'll pay from your bistamp coupon to your Paypal account. Bitinstant took almost 10% USD so I'm trying to find someone else. But it is quick and they are reliaible. If there's a problem, their support team responds quickly.

I had actually called Paypal about bitcoins and they said they are very familiar with bitcoins now and as long as you are a verified member of Paypal, there won't be a delay in the transaction.